Boston Financial Management, LLC - Lincoln Financial Group

[Pages:13]Form ADV Part 2

March 26, 2020

Boston Financial Management, LLC

255 State Street, 6th Floor Boston, MA 02109 617-338-8108



This document discloses information about the qualifications and business practices of Boston Financial Management, LLC. If you have any questions about the contents of this document, or would like to request a copy of this document, which will be provided free of charge, please contact Charles J. Zambri, MBA, MSF, Chief Compliance Officer, at CharlieZ@ or 617-275-0364. The information in this document has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Boston Financial Management, LLC is a Registered Investment Adviser. Registration of an Investment Adviser does not imply any level of skill or training. The oral and written communications of an adviser provide you with information with which you determine to hire or retain an adviser. Additional information about Boston Financial Management, LLC is also available on the SEC's website at adviserinfo..

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Item 2 Material Changes

The following material changes have been made to our firm brochure since our last annual updating amendment dated March 5, 2019:

We have updated Item 5 to reflect that our fees are payable in advance. In the past we have offered or delivered information about our qualifications and business practices to clients on at least an annual basis. Pursuant to SEC Rules, we will ensure that you receive a summary of any material changes to this and subsequent disclosure documents within 120 days of the close of our business' fiscal year (December 31st). We may further provide other ongoing disclosure information about material changes as necessary. We will further provide you with a new disclosure document as necessary based on changes or new information, at any time, without charge.

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Item 3 Table Of Contents

Item 1 Cover Page Item 2 Material Changes Item 3 Table Of Contents Item 4 Advisory Business Item 5 Fees and Compensation Item 6 Performance-Based Fees and Side-By-Side Management Item 7 Types of Clients Item 8 Methods of Analysis, Investment Strategies and Risk of Loss Item 9 Disciplinary Information Item 10 Other Financial Industry Activities and Affiliations Item 11 Code of Ethics, Participation in Client Transactions and Personal Trading Item 12 Brokerage Practices Item 13 Review of Accounts Item 14 Client Referrals and Other Compensation Item 15 Custody Item 16 Investment Discretion Item 17 Voting Client Securities Item 18 Financial Information

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Item 4 Advisory Business

Boston Financial Management, LLC is an independent wealth management firm that provides investment management, financial planning, estate planning and trust services to individuals, families, endowments, and not-for-profit organizations. We were founded to answer the unique challenges that come with wealth, and continue to provide solutions to our clients' most important financial questions.

Our team creates comprehensive and customized financial plans to address the financial needs and life goals of our clients based on a review of their personal financial situation and investment objectives. We offer strategic advice that integrates with that of other advisors our clients may have. Our team monitors our clients' portfolios, manages investment changes and communicates regularly with clients to review any changes to their financial picture. As changes occur, BFM can implement appropriate adjustments to our clients' plans.

Boston Financial Management, LLC furnishes investment supervisory services to clients both on a discretionary and a non-discretionary basis. The strategies we offer are listed below, but additionally, we may manage client portfolios in accordance with specialized or hybrid strategies not listed. In managing accounts, we consult at the outset with the client for the purpose of establishing investment objectives, and to determine an appropriate investment strategy suited to the client's investment objectives.

? BFM High Quality Mid Cap Strategy ? BFM High Quality Dividend Appreciation Strategy ? BFM Balanced Strategy ? BFM International Equity Strategy ? BFM Fixed Income Strategy ? BFM Strategic Asset Allocation Strategy

Clients may impose restrictions on investments in certain securities or types of securities or direct the purchase of specific securities for their accounts, and we will honor those restrictions and execute those directions. Investments are selected and periodically reviewed in light of such objectives and strategy. From time to time, we, in consultation with the client, review, and if appropriate, revise the investment objectives and strategy.

Boston Financial Management also offers clients a broad range of estate and financial planning services, which may include any or all of the following:

? Customized cash-flow analysis ? Estate plan review and integration with wealth management plan ? Retirement planning ? Estate & income tax exposure review ? Charitable planning ? Divorce financial analysis

Through Boston Fiduciary Services, LLC, we provide professional trustee and fiduciary services to individuals, business and non-profit organizations. The Boston Financial Management Fiduciary Committee is comprised of experienced and credentialed professionals who provide oversight on all fiduciary matters where we are named as trustee. Boston Fiduciary Services, LLC is a wholly owned subsidiary of Boston Financial Management.

We are owned by Richard Harding Morse and other officers of the corporation and have been providing advisory services since 1976.

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As of February 21, 2020, we managed $2,767,994,167 of client assets on a discretionary basis and $78,907,311 of client assets on a non-discretionary basis.

Item 5 Fees and Compensation

Boston Financial Management's services are provided to clients on a negotiated fee basis. Such fees are based on a percentage of the market value of the assets under management.

The fee schedule currently in effect for accounts is:

1.20% on the first $2 million of market value; 1.00% on the next $2 million of market value; 0.80% on the next $2 million of market value; and 0.60% on the market value of the remainder of the account.

The minimum fee for accounts is $24,000 per year.

A different fee schedule may be agreed to for clients invested solely in fixed income securities. The minimum fee for fixed income accounts is $4,000.00 per year.

Fees are payable quarterly in advance (except for a few legacy clients that are billed in arrears). Accounts are valued using the market value on the last business day of the previous calendar quarter.

In some instances, we and the client may agree on a fee schedule different from that set forth above. The specific manner in which fees are charged is established in a client's written agreement with us. Clients may also elect to be billed directly for fees or to authorize us to directly debit fees from their accounts.

In the event of a termination during a quarterly period, the fee would be prorated through the termination date, and the portfolio valued as of the termination date; except that if the termination occurred within five (5) days after the client entered into the advisory arrangement, no charge would be made.

In some instances, we may furnish investment advice through consultations which do not involve investment supervisory services. In such situations, we and the client may negotiate a fee based on time spent, or a fixed fee.

In addition to providing investment advisory and portfolio management services, Boston Financial Management offers intergenerational wealth management services and estate and financial planning advice, and trust services. This advice is generally offered at no additional charge to our investment advisory clients. Others wishing to retain us for this advice pay a negotiable fee based on the complexity of their specific situation.

Our fees are exclusive of brokerage commissions, transaction fees, and other related costs and expenses which shall be incurred by the client. Clients may incur certain charges imposed by custodians, brokers, third party investment managers and other third parties such as fees charged by managers, custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire and electronic fund transfer fees, and other fees and taxes on brokerage accounts and securities transactions. Mutual funds and exchange traded funds also charge internal management fees, which

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are disclosed in a fund's prospectus. Such charges, fees and commissions are exclusive of and in addition to Boston Financial Management's fee, and we do not receive any portion of these fees and costs.

Client assets are maintained by a "qualified custodian" selected by the client. Certain custodians will charge you separately for custody services, while other custodians do not charge clients separately for custody but instead receive compensation from clients in the form of commissions on securities trades executed through the custodian or other transaction-related compensation. Custodians may also receive a fee (generally lower than the applicable commission on trades it executes) for clearance and settlement of trades executed through broker-dealers other than the custodian (this custodial fee is in addition to the other broker-dealer's fees). We encourage you to review your custodial agreement to understand the compensation arrangements with your particular custodian.

Boston Financial Management, LLC does participate in wrap fee programs. Item 12 further describes the factors that we consider, including proprietary and third-party research, in selecting or recommending broker-dealers for client transactions and determining the reasonableness of their commissions.

Item 6 Performance-Based Fees and Side-By-Side Management

Boston Financial Management, LLC does not charge any performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client).

Item 7 Types of Clients

Boston Financial Management, LLC provides wealth management services to individuals, high net worth individuals, banks or thrift institutions, corporate pension and profit-sharing plans, charitable institutions, foundations, endowments, trusts and estates, and other U.S. entities. In addition, Boston Financial Management, LLC acts as investment adviser to the Marlborough US Multi-Cap Income Fund, an open-ended investment company registered in the United Kingdom.

For our clients to derive the maximum benefit of our services, we suggest a minimum relationship size of $2,000,000.00.

Item 8 Methods of Analysis, Investment Strategies and Risk of Loss

BFM believes that public equity returns in individual companies should mirror the underlying returns of the businesses when held for long periods of time. As such, companies with attractive economics and reinvestment opportunities provide compelling returns to shareholders, particularly when the market is mispricing the long-term potential of the business. Finding such unique opportunities requires hard work and patience; however, with thorough and independent research, it is possible to identify a select number of companies to invest in. BFM focuses on finding high quality businesses that can be owned for many years. The team assesses the competitive risks and opportunities each individual business faces and invests in companies with solid growth opportunities. These businesses tend to share similar characteristics including:

? A demonstrated history of stable and growing cash flow and high returns on invested capital; ? Stable business models relatively less exposed to economic gyrations and competitive threats; ? Competitive advantages that suggest sustainable profitability well into the future; ? Low capital intensity and low-risk balance sheets; and ? Employee compensation aligned with shareholder interests and material insider ownership.

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BFM's investment research is developed and performed independently, placing emphasis on the longterm competitive drivers of businesses, rather than on short-term accounting results. The team speaks with management, competitors, and customers to form views on the quality of and opportunities/challenges facing each company. We also use information found in financial publications, company press releases and conference calls, annual reports, prospectuses, company filings with the Securities and Exchange Commission, research materials prepared by others and corporate ratings services. Thorough financial analysis is performed to assess the levers of profitability and growth, and ultimately value each business. Where possible, BFM focuses on finding niche companies that are often overlooked and under-covered by traditional sell-side analysts. With a differentiated focus than traditional research analysts, BFM's work and ideas are often outside of consensus thinking.

BFM's typical investment horizon is at least five years. Much of traditional investment management is overly focused on the next quarter or year. A focus on the longer term provides a time arbitrage advantage, which is a critical edge in an increasingly myopic and short-term oriented investment landscape.

Securities purchased consist predominantly of investment-grade securities including common and preferred stocks; bonds and notes of corporations, federal, state, and local governments and agencies; mutual funds; and exchange- traded funds. Covered call options may be written for client accounts from time to time, as appropriate. Boston Financial Management does not ordinarily engage in short sales or margin transactions on behalf of clients.

In the case of accounts over which Boston Financial Management has discretionary authority, the exercise of such authority is limited by the investment objectives and strategy agreed upon with the client. In managing accounts, Boston Financial Management takes into consideration the client's objectives, tolerance for risk, and need for current income versus future return and appreciation.

Our wealth managers and securities analysts employ a combination of charting, fundamental, technical, and cyclical methodologies in researching securities for investment and in implementing investment strategies. Among the sources of information we employ in performing our investment research and securities analysis are: Financial publications, inspections of corporate activities, research materials prepared by others, corporate ratings services, company press releases and conference calls, and annual reports, prospectuses and filings with the Securities and Exchange Commission.

We generally do not participate in any initial public offerings or secondary offerings. Rarely a client, for whatever reason unrelated to our management of her/his account, may be given the opportunity to participate in such offerings, in which instances these transactions are considered to be nondiscretionary directed transactions and are handled by us as an accommodation to the client.

Investing in securities involves risk of loss that clients should be prepared to bear.

The specific risks inherent in our strategy for managing investment portfolios are:

? Economic risk: The risk that the value of portfolio may go down as a result of unfavorable conditions in the domestic or international economy;

? Inflation risk: The risk that prices and costs of goods and services may grow faster than the appreciation of the portfolio;

? Market value risk: The risk that declines in the broader markets for securities as a whole, or for specific securities types or securities in specific economic sectors, may have an adverse impact

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on specific securities held in a portfolio regardless of the underlying intrinsic value or relative strength of the entity issuing that security; and ? Too conservative: The risk that a portfolio may not appreciate as much or as quickly as other portfolios engaging other investment strategies.

Item 9 Disciplinary Information

Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of Boston Financial Management, LLC or the integrity of our management. Boston Financial Management, LLC has no legal or disciplinary events to disclose.

Item 10 Other Financial Industry Activities and Affiliations

Boston Fiduciary Services, LLC, which is indirectly wholly-owned and controlled by Boston Financial Management, LLC (through Boston Financial Management, Inc.), has been established to accommodate clients who do not need a regulated non- depository Trust Company but merely need or desire a Corporate Trustee to act as trustee for their trusts.

Individual employees of Boston Financial Management, LLC, at the request and sole discretion of a client, may serve as trustee of a client's trust. Employees acting as trustees of clients' trusts are expected to be comfortable with the personal liability involved and to secure the approval of the President before agreeing to serve. Implicit in the employees' acceptance is a commitment to offer their resignation as trustee when they are no longer Boston Financial Management employees, or when requested to do so by the client or by Boston Financial Management.

Boston Financial Management participates in several wrap-fee programs sponsored by unaffiliated broker-dealers ("Sponsors"). In a given wrap-fee arrangement, the Sponsor recommends Boston Financial Management or other investment advisers to the wrap fee program clients and charges a single asset-based fee that covers brokerage costs, advisory costs, and custody fees. Boston Financial Management may sponsor marketing events with a wrap fee program Sponsor that may pose a potential conflict of interest, as clients are referred to Boston Financial Management by the program.

Under a wrap account program, Boston Financial Management offers continuous investment management advice to clients based on their individual needs. The investment style of Boston Financial Management used to manage these accounts is similar to the style it uses to manage nonwrap fee clients. Boston Financial Management maintains exclusive investment discretion as to which securities shall be purchased or sold in a client's account in a manner consistent with the selected investment strategy and client restrictions (if any).

Boston Financial Management is not responsible for collection of data about clients or prospects investment objectives if the Sponsor is referring the person. Boston Financial Management makes investment decisions for clients by relying on the Sponsor to provide Boston Financial Management with information regarding clients' investment objectives as well as any changes to the investment objectives. In addition, Boston Financial Management typically does not meet with wrap fee clients. Instead, the Sponsor will handle all client or prospect inquiries regarding accounts that Boston Financial Management manages.

A wrap account client has the ability to establish special limitations on the investments in his or her investment portfolio. Wrap account clients also maintain individual ownership of the securities in his or her account and has the right to withdraw, hypothecate, vote, and pledge such securities.

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